E*TRADE, also known as ETRADE, stands as one of the prominent online brokers in the United States, established in 1982. Renowned for its competitive trading fees, it facilitates commission-free trading of stocks and ETFs.
Regrettably, ETRADE falls short in granting direct access to cryptocurrencies like Bitcoin, Ethereum, Dogecoin, Shiba Inu, Ripple, Stellar, Cardano, Litecoin, and various other altcoins.
This article aims to elucidate alternative avenues for gaining exposure to cryptocurrencies on ETRADE. It delves into methods such as investing in stocks, crypto futures, coin trusts, and ETFs.
Additionally, it highlights four leading exchanges that do offer authentic access to the world of cryptocurrencies.
If you want to own the cryptos you trade, E*TRADE isn’t the ideal choice. Consider these alternatives:
- eToro:
- Commission-free broker and leading social trading platform.
- Supports over 45 cryptocurrencies.
- Offers various products like stocks and ETFs.
- Cryptocurrency trading costs 1%.
- Coinbase:
- One of the world’s largest crypto exchanges with over 80 million users.
- Provides a diverse range of digital currencies.
- Kraken:
- The fifth-largest Bitcoin exchange globally by trade volumes.
- Operational in over 200 countries with 10 million users, especially prevalent in Europe.
1. eToro
eToro offers a comprehensive online brokerage service, covering major cryptocurrencies, stocks, currencies, CFDs, and ETFs.
It distinguishes itself with a unique “social investing” feature, allowing inexperienced traders to mimic the actions of professionals.
Staking is a key attraction, resembling a locked savings account that offers rewards in exchange for reduced liquidity.
Users in Australia, Europe, or the UK enjoy free asset insurance up to 1 million AUS, EUR, or GBP, respectively.
In the US, standard FDIC insurance up to $250,000 is provided for cash. Account opening is user-friendly, with the option for a demo account.
Various funding methods are available for crypto purchases, but only USD is accepted as fiat currency.
eToro Pros and Cons
Pros
- Real Crypto Exposure
- Commission-free stock and ETFs trading (not all ETFs are commission-free)
- Slick, modern, and easy for anyone to use
- Quick and smooth account opening
- It makes trading social; allows users to follow and copy friends’ investments and the investments of famous traders
- Offers a demo version
Cons
- Does not offer the most cryptos relative to other exchanges
- Spread, overnight, inactivity, and currency conversion fees higher than average
- Only one currency account (USD)
2. Coinbase
Coinbase, a leading global crypto exchange with a wide range of supported cryptocurrencies and a large user base, caters to both beginners and experienced traders.
For advanced users, Coinbase Pro is recommended.
The platform offers a variety of cryptocurrencies, including popular ones like Bitcoin and Ethereum, as well as mobile apps that are user-friendly.
However, it has relatively high fees, and the fee structure can be complex, particularly for smaller transactions.
Coinbase provides insurance against hacking but not for breaches due to personal negligence.
It is regulated by the New York State Department of Financial Services in the USA and by the Central Bank of Ireland in Europe.
Coinbase Pros and Cons
- A world leader for real crypto trading
- An impressive array of coins on offer
- Three highly-rated mobile apps catering to all types of crypto investors
Cons
- High fees, including a custody fee
3. Kraken
Kraken caters to crypto traders and enthusiasts, providing ownership of traded cryptos and futures trading options.
The platform offers regulated futures contracts for various cryptocurrencies, including Bitcoin, Bitcoin Cash, Ethereum, Litecoin, and Ripple.
With user-friendly design, live support, and tailored tools for beginners to experts, Kraken also offers staking options like Kava (23% annually) and Polkadot (12%).
Its fees are competitive, capping at 2% for standard crypto transactions, and it maintains a secure reputation by storing 95% of assets in cold storage.
Regulated by FinCEN in the USA, Kraken lacks a retail wallet but ensures asset security across different geographies.
Kraken Pros and Cons
Pros
- Futures and staking options, in addition to real cryptos
- Excellent choice for beginners or intermediates
- Relatively inexpensive fees
Cons
- No personal wallet service
- Not insured
How to gain indirect exposure to crypto on ETRADE
1. Crypto Stocks
Block, Coinbase, and Riot Blockchain are well-known stocks that mirror the fluctuations in crypto prices.
When we talk about “tracking,” we mean observing the overall connections between cryptocurrency prices and the prices of these stocks.
If you want to monitor crypto trends without creating a new brokerage account to own cryptocurrencies directly, options like these stocks can be a viable alternative to platforms like ETRADE.
2. Coin Trusts, Index Funds, & ETFs
Cryptocurrency trusts, also known as “coin” trusts, and crypto ETFs function in nearly the same way as stocks, but there are notable distinctions between them.
Coin trusts, akin to traditional trusts, are specifically designed to hold cryptocurrencies exclusively.
Much like ETFs, they are traded similarly to stocks, primarily on OTC markets rather than exchanges.
Coin trusts entered the trading landscape ahead of crypto ETFs because of the cautious stance taken by the US SEC, which hesitated to approve ETFs without thorough due diligence.
It is advisable to consult with a local tax advisor well-versed in cryptocurrencies to assess specific tax benefits before making a purchase.
Conversely, ETFs are traded on exchanges and offer swift, passive access to cryptocurrency exposure.
Several crypto ETFs, including the Proshares Bitcoin ETF (BITO), are available, providing investors with diverse options.
3. Crypto Futures
Cryptocurrency futures, unlike traditional buy-and-hold assets, cater to experienced investors seeking leverage.
ETRADE offers regulated CFTC futures, including the CME Ether Contract representing 50 Ethereum coins.
With four contracts covering Bitcoin and Ether, these trades occur almost continuously, but note that losses can escalate rapidly due to margin accounts and high leverage, reaching up to 50x.
Conclusion
Ultimately, the decision hinges on your individual preferences. Are you inclined towards possessing cryptocurrency, or do you prefer incorporating it into a more extensive portfolio involving traditional stocks and bonds?
For those inclined towards owning cryptocurrency, the good news is that the majority of crypto exchanges simplify the account opening procedure into a few user-friendly steps. This grants you direct ownership, the ability to stake, and engage in leveraged trading, all accessible through your mobile phone. Alternatively, if you choose a comprehensive platform like eToro, you can seamlessly manage both cryptocurrency and a traditional portfolio comprising stocks, ETFs, futures, and more simultaneously.